French retailer Carrefour is sewing up plans to launch its next two stores in the northern Indian cities of Agra and Meerut.

With German chain Metro entering the Capital last week, and American retailer Walmart already establishing presence in several small North Indian towns, the French firm has been forced to pull up its socks.

“The Meerut store is under construction and a location has been identified for the Agra store. Carrefour plans to open the store later this year. The two stores will be smaller than the Delhi store,” a person close to the development said. In December 2010, Carrefour had set up its maiden outlet in Delhi's Seelampur area. The 56,000 sq. ft. store houses over 10,000 stock keeping units

THE competition

Carrefour had opened its second store in Jaipur late last year. It has two operational outlets in the country. In direct contrast, German retailer Metro has 10 stores including the Delhi outlet, while Walmart has 17 stores largely in the West and North. Both Walmart and Metro had said on separate occasions that they want to expand their reach in the country.

“Carrefour has been cautious in its expansion. But the entry of Metro and Walmart in northern India has expanded the retail canvas and Carrefour's management would like to take the competition by the horns. Also, there is direction from the global parent to speed up its expansion. Other players in the cash-and-carry business too are eyeing the market in India,” the person said.

A Carrefour spokesperson declined to comment on the issue. Carrefour is the second largest retailer of the world with revenues topping €90 billion.

India allows 100 per cent FDI in cash-and-carry and single brand retail. However, FDI investment is barred in multi-brand retail.

Mr Purnendu Kumar, Senior Vice-President – Retail, Technopak, said, “The reason why most big players are focusing on tier 2 cities is because they can get bigger margins. Cost of land is cheap and due to sheer volume they can do better business. Also by virtue of their B2B business model, these companies are effectively replacing smaller distributors and can get many brands under their umbrella.”

>bindu.menon@thehindu.co.in

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